China enacts outbound investment rules to curb overseas capital and technology flow

China has issued comprehensive outbound investment regulations that will take effect on July 1. The framework, signed by Premier Li Qiang, gives the state legal authority to retaliate against foreign governments or entities that restrict Chinese capital, including the ability to adjust bilateral investment policies, restrict imports and exports, and bar foreign investors from China. It also expands controls over the overseas transfer of technology and data, prohibiting cross‑border personnel deployments, offshore technical guidance and training programmes that could move restricted goods, services or information abroad.

Investments are now classified as encouraged, restricted or prohibited based on national‑security assessments, with fines of up to 1 % of the investment amount and possible forced divestments for prohibited deals. The rules complement earlier measures that gave Beijing power to intervene when foreign companies relocate supply chains out of China, signalling a broader shift toward an economic “fortress” as geopolitical tensions rise.